Total Assets to Sales Ratio

Posted in Finance, Accounting and Economics Terms, Total Reads: 895

Definition: Total Assets to Sales Ratio

It is the measure of efficiency with which a company is using its assets to generate sales or revenue.

The basic formula is

Total assets to sales ratio = Total assets/ sales or revenue

The total assets to sales ratio is an inverse of the asset turnover ratio. However, both indicate same thing i.e. with which a company utilizes its assets. The higher the total assets to sales ratio, it means that the company needs higher number of assets to generate same level of sales and hence lower operating efficiency is indicated.


Total assets to sales ratio is not used as a very strong financial performance indicator and varies widely depending from company to company and industry to industry. A total asset to sales ratio (or assets turnover ratio) is used in DuPont analysis, a very well-known financial performance indicator. DuPont analysis, which indicates return on equity, is made of three parts – asset turnover ratio, profit margin and financial leverage.



Looking for Similar Definitions & Concepts, Search Business Concepts

Similar Definitions from same Category: